HR trends for 2023

In the midst of an economic downturn, HR needs once again to take the lead. What is in store for HR in 2023? In this blog, we list 5 top trends to look out for.

Businesses have a lot to consider, particularly around their people. Keeping employees motivated, focused and healthy will be a key priority for the coming year. Doing this successfully is vital to ride out the turbulent times ahead and make the most of hopefully more favourable circumstances in 2024 and beyond.

In these uniquely difficult times, the HR function has never been so crucial. It’s the strategic connector between senior leaders and the workforce ensuring everyone understands the goals of the organisation and their role in achieving them. HR teams will have a full inbox this year, but here are five trends that will be at the top of their to-do list.

1. Doing more with less – maintaining employee engagement and performance as budgets tighten

Many businesses will be faced with the prospect of reduced budgets this year because of rising prices. With energy bills still at unusually high levels and resources costing significantly more, to balance the books, other areas such as training budgets or bonuses are likely to be squeezed. How can employers ensure employees stay motivated when there may be fewer rewards on offer?

This is where the HR team needs to come to the fore. They need to work with senior leaders to ensure employees are aware of the challenges they face, facilitating honest, clear and frequent communication. Everyone is very aware of the difficulties that currently exist, so being upfront about how these affect the business will build trust with employees. 

HR is also in a position to act as an intermediary, ensuring the employees’ voice is heard by senior leaders and they are aware of their concerns and views. Keeping a frank and candid dialogue going will help to prevent resentments from growing and create greater unity, with the whole organisation working together to pull in the same direction.

Ensuring the performance management process is fit for purpose will also be essential. It is more important than ever that employees are working towards relevant SMART objectives that align with the overall aims of the organisation, ensuring focus is put on the most important tasks. When resources are tight, efficiency of effort is vital. Regular check-ins between managers and employees to monitor progress against these objectives and address any issues will help keep everyone on track.

2. Developing conscious leadership – courageous, authentic leaders who treat employees as individuals and partners in the company’s success 

Honesty will be a key theme of 2023. For managers, this means treating their employees as equals with the skills and intelligence to understand what is expected of them and the ability to discover for themselves how best to do this.

Employees want to be seen as individuals, with their own personal thoughts and feelings. They don’t want to be seen as part of a group based on just one characteristic, like age, gender or ethnicity. Managers need to take the time to get to know each member of their team, finding out how they would like their career to develop and what is important to them. They need to establish how best they can support them in these ambitions and what help will be most appropriate.

With many employers adopting hybrid working practices, conscious leadership is a vital part of making this approach work. Managers who know their employees and tailor how they manage each one accordingly, will be far better equipped to help employees to be focused and motivated.

3. Building change resilience – enabling employees to embrace and cope with organisational change and digital transformation 

People like stability, continuity, to be certain of what lies around the corner. At the moment, this is in short supply. Most businesses, however robust they might be, are likely to go through some kind of change this year. HR has an important role to play this year  in helping employees to cope effectively with this through sharing appropriate resilience and coping strategies.

Again, clear and honest communication will be the key to helping change to go smoothly. HR teams are in the position to make sure a healthy dialogue is maintained between senior leaders and the workforce. Explaining why the change is needed, what it means for employees and what the future will look like will help take the fear of the unknown out of the situation and ensure employees feel included in the process.

To improve efficiency and support a move to hybrid working, many workplaces may be looking at introducing new digital solutions. While some employees will adapt and embrace these straightaway, others will require more help and support to feel comfortable and confident with the new systems. HR has a vital part to play in the rolling out of new technology, making sure no one is left behind.

4. Creating effective wellbeing support – understanding the pressures employees are facing both inside and outside of work

The squeeze on incomes is being felt by many and predicted to worsen over the course of 2023. The Office for Budget Responsibility has predicted that UK households will suffer a 7.1% decrease in living standards over the next two years. This is the largest drop seen for 60 years and is likely to affect people in a variety of ways.

A recent survey uncovered that two-thirds of organisations are already aware that their employees are struggling financially and most expected this to worsen over the winter months. Providing practical support such as access to financial experts to help with budgeting, can help take this pressure off employees and understand that help is available.

Concerns over money are one of the most common causes of stress and anxiety. Providing effective mental health support should be a priority for HR teams this year. As well as providing access to experts and signposting third party support available, encouraging those who are struggling to come forward and ask for help is crucial. An effective way to do this can be through regular wellbeing check-ins between managers and employees. These demonstrate to employees that it is OK to not be OK and provide employees with an easy way to highlight problems as soon as they occur.

5. Making hybrid working work in practice – finding a solution that suits employers and employees

Since the end of lockdown, many HR teams have been consumed by hybrid working – what it should look like, how it should work and who it applies to. While employees have enjoyed the many benefits it offers, employers have struggled with certain aspects of it, particularly around maintaining a sense of company culture, supporting effective collaboration and upholding productivity.

With three-quarters of UK companies offering hybrid working, more flexibility in where, when and how employees work is definitely here to stay. The priority for HR teams this year should be to find the approach that works best for their employees and the business and enshrine it within their culture, so everyone is clear on what is expected of them. Creating a Hybrid Charter, that is agreed by all sides and sets out the rules for a whole organisation or by department or team is a great place to start.

Each business is different and within it, the needs of each team is likely to vary. A “one-size-fits-all” approach is unlikely to work for everyone in the organisation. The key to success will be a more nuanced strategy that takes into account the requirements and working practices of different teams. At the end of the day, the important thing is that the work is completed on time and to a high standard, not when and where it is done. 

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These are just some of the trends that will occupy HR teams this year. With many people facing a recession for the first time during their working careers, many more may arise. If businesses are to safely navigate the next 12 months, they will need their people to perform to their full potential. While these will not be simple to overcome, they provide an opportunity for HR to come to the fore and demonstrate their real value.